Full Press Release Details
Quarter 2025 Corporate Update Conference Call
O R P O R A T E P A R T I C I P A N T S
Kirk-Ellis, Director, Corporate Communications
Hochman, Chairman, Chief Executive Officer and Founder
Taylor, Chief Financial Officer
O N F E R E N C E C A L L P A R T I C I P A N T S
O'Brien, Piper Sandler
Schock, B. Riley Securities
for Yi Chen, H.C. Wainwright
R E S E N T A T I O N
Welcome to Orchestra Bio's Third Quarter 2025 Corporate Update Call.
this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should
require operator assistance during the conference, please press star, zero on your telephone keypad.
note, this conference is being recorded.
will now turn the conference over to Kelsey Kirk-Ellis, Director of Corporate Communications. Thank you. You may begin.
on Slide 2, before the call begins we would like to advise you that management will be making forward-looking statements in their comments
concerning expectations regarding certain transactions, as well as Management's expectations regarding our financial condition
and cash runway. These forward-looking statements are based on Management's current expectations and are subject to risks and uncertainties
that could cause actual results to differ materially, including the risks listed under the heading Item 1A Risk Factors in our Form 10-K
for the year ended December 31, 2024, and in our quarterly report on Form 10-Q for the quarter ended March 31, 2025.
undertakes no obligation to update its forward-looking statements to reflect subsequent events or circumstances, and you should not assume
that the comments made today are valid in the future.
now pleased to introduce David Hochman.
morning and thank you for joining us today. My name is David Hochman and I am the Chairman and CEO of Orchestra BioMed. Before we begin, I'd
like to note that, while today's update follows the recent release of our third quarter financial results, this call is not intended
to review financial performance or provide earnings-related commentary, nor are we necessarily going to provide a business update call
like this to coincide with all future quarterly financial filings. As we are doing today, we will host business updates when we have
significant developments for which we believe providing additional perspective to shareholders and investors is beneficial.
BioMed was founded to pursue a partnership-enabled business model. Our goal is to accelerate high-impact medical device innovations to
physicians and patients through strategic partnerships with global market leaders. By focusing our efforts on product development through
pivotal trial data and aligning our interests with established global market leaders, our goal is to benefit patients and physicians
while yielding exceptional profitability for our shareholders.
built the Company around two flagship programs, AVIM Therapy and Virtue SAB, that address targeted unmet needs within hypertensive heart
disease and artery disease, two of the most significant medical problems in the world. The opportunities for our therapies both represent
multi-billion dollar markets within two of the most established fields of interventional medicine, cardiac rhythm management and interventional
has made considerable efforts to provide an accurate transcription. There may be material errors, omissions, or inaccuracies in the reporting
of the substance of the conference call. This transcript is being made available for information purposes only.
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am proud to say we are enrolling patients in pivotal IDE trials for both our therapies for their lead indications. These trials are specifically
designed to generate clinical data to support regulatory approvals and commercial adoption of our therapies. We are well-funded and well-organized
to drive these studies through completion of enrollment and in the case of AVIM therapy, primary endpoint results.
goal today is to highlight and provide additional context with respect to our significant achievements over the last several months.
that period, we raised nearly $150 million in capital and capital commitments, strengthened our collaboration with Medtronic, entered
into a new right of first refusal agreement with Terumo that replaces our prior agreement, entered into a new strategic capital relationship
with Ligand, secured FDA Breakthrough Device Designation for AVIM Therapy, significantly enhanced the protocol for our BACKBEAT global
pivotal trial, and launched enrollment of our U.S. pivotal coronary trial for Virtue SAB.
are very proud of these accomplishments, and I want to recognize and congratulate the entire Orchestra BioMed team for their contributions
to these achievements.
today's call, I will review each of them briefly and explain how we are now optimally positioned to achieve our next major objectives
of completing enrollment of both our pivotal trials and advancing the primary endpoint readout.
let's move to Slide 4.
start by reviewing how we secured nearly $150 million in financing over the last few months.
August 4, we announced the completion of a multi-component strategic-led financing, which, with the subsequent exercise of the equity
financing greenshoe, generated total gross proceeds of $117.6 million. I want to take some time to talk about the different elements
of this financing, which was principally led by our existing AVIM therapy strategic collaborator, Medtronic, and a new strategic capital
partner, Ligand. It's important to review the scope and structure of each transaction so investors can understand how this provided critical
capital in a way that protects shareholder value, limits equity dilution, reaffirms the alignment we already have with Medtronic, and
brought, in the form of Ligand's investment, a long-term minded and outstanding new strategic investor into the fold.
were three components to the overall financing. Two of these were the $55 million in capital committed to Orchestra from non-dilutive
transactions with Medtronic and Ligand. The third was over $62 million that came in as equity investments with Medtronic and Ligand acting
as key lead equity investors as well. I'll first detail the strategic investments, then move on to the equity structure.
terms of the non-equity strategic components, Medtronic is, as you are likely already aware, our strategic collaborator for the development
and commercialization of AVIM therapy for the treatment of uncontrolled hypertension in patients indicated for a pacemaker. Medtronic
also has the right of first negotiation to expand our collaboration to the broader hypertension population. We are entitled to royalties
on the future sales of AVIM-enabled devices that Medtronic commercializes.
committed $31.6 million in additional capital to the Company; $11.6 million came in as additional equity in a private placement structure,
bringing Medtronic's total equity investment in Orchestra BioMed to nearly $62 million and their total ownership percentage to approximately
18%. Medtronic also committed an additional $20 million to the Company in the form of a long-term convertible note instrument. That capital
is fully committed and expected to be received in April 2026. Importantly, this note will convert into a revenue share credit structure
upon FDA approval of AVIM therapy. Ultimately, we will credit back to Medtronic 15% of the royalties we receive from them for sales of
AVIM therapy-enabled devices up to a cap of $40 million. We believe this structure reflects Medtronic's enthusiasm for the clinical and
commercial potential of AVIM therapy.
has made considerable efforts to provide an accurate transcription. There may be material errors, omissions, or inaccuracies in the reporting
of the substance of the conference call. This transcript is being made available for information purposes only.
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are very excited to now have Ligand as a new strategic financial partner. Ligand is a biopharmaceutical company that invests in the groundbreaking
medicines of today and tomorrow. Ligand funds the clinical development and commercialization of high-value programs that can improve
and extend lives around the world. Their business model focuses on generating revenue through royalties, licensing fees, and milestone
payments from a broad portfolio of partnered programs. In August, Ligand committed $35 million to purchase a stake in Orchestra's future
royalty-based cash flows from AVIM therapy and Virtue SAB. Essentially, Ligand purchased a royalty on our future royalties. Ligand funded
the first $20 million tranche and will provide the remaining $15 million at the end of April next year, subject to customary conditions.
also joined Medtronic and purchased $5 million of equity in a parallel private placement, bringing their total investment commitment
to $40 million. We believe Ligand's strategic investment commitment to Orchestra is based on their confidence, following substantial
due diligence, that both AVIM therapy and Virtue SAB can generate significant royalty cash flows to Orchestra BioMed in the future. Ligand's
long-term return profile assumes that we and our partners will successfully bring our therapies to market and generate strong future
last component of our major financing announcement in August was the simultaneous completion of our first underwritten public equity
offering, for which Piper Sandler and TD Cowen acted as joint bookrunners. This financing was oversubscribed and the underwriters exercised
their option to purchase additional shares. Our underwritten public offering included significant participation from large existing shareholders
and generated total gross proceeds of $46 million.
with the $16.6 million in gross proceeds from the parallel PIPE with Medtronic and Ligand, we brought in a total of $62.6 million in
equity proceeds. Added to our $55 million in strategic commitments, our August financing event secured a total of $117.6 million.
October 28th, we announced our new strategic agreements with Terumo, which generated an additional $30 million in proceeds to Orchestra.
This capital came in the form of a $10 million payment in exchange for granting Terumo a right of first refusal related to Virtue SAB
in the coronary market, as well as a $20 million purchase of non-voting preferred stock. Notably, the preferred stock cannot convert
to common until we disclose the primary endpoint from the Virtue Trial to Terumo, and our stock is traded above $15 per share subsequent
to such disclosure. Further, the conversion price is the higher of $12 per share, or a 20% discount from where the stock is trading at
the time of conversion. The preferred stock can also convert into common in the event of certain change of control transactions. We view
these terms as quite favorable to our current shareholders.
combination of these multiple strategic and equity financings, which with the additional capital from Terumo add up to an aggregate of
$147.6 million, materially strengthen our balance sheet and extend our cash runway into the fourth quarter of 2027. Most importantly,